7 ms·

A Fascinating Minimum-Wage Experiment Is About to Unfold

36 points by stillsut 11y ago

naturalethic 11y ago
The fascinating part will be the emergence of a larger black market for labor.
- drzaiusapelord 11y ago
  The real fascinating part is how quickly we'll have robotics doing a lot of those job when municipalities push out mandatory $15 to $20 an hour laws. These low level fungible workers have been mislead by the far left into thinking this is all "free money" and things like unemployment, lay offs, automation, etc can't happen. A lot of companies have tested automation solutions and have been shy to launch them for a variety of reasons, mostly political. $15 an hour full time is a $31,000 a year job. In most markets that's entry level white collar college educated material that will work exempt for you. Fry cooks and dishwashers who think they can get that via legislation are going to be surprised at how quick they can be replaced with machines or in other ways be made redundant. Personally, I think we should just move to as much robotics as possible and setup some kind of minimum welfare income and call it a day. All this pussy-footing around with unions, minimum wages, etc just delays the inevitable.
  - jonnycowboy 11y ago
    Do you think a person working full time should be classified as poor?
    - drzaiusapelord 11y ago
      Yes. If you're some teenager selling ice cream for the summer and being taken care of by your parents, you shouldn't be making $35,000 a year. The larger question, of course, should be answered by the customers of McDonalds or Target. Are they willing to pay twice the cost of goods so everyone who works there can make more money? Probably not, and those businesses will probably fold. Now you have everyone complaining about unemployment and the lack of affordable goods. Do you pass yet another law to make those cheap? Who pays for this stuff in the end? You can't economically dictate everything unless you want to migrate into command-economy communism, and the world tried that fairly recently with disastrous results. Not to mention price inflation for common goods once the local econony has everyone getting $15 an hour. Great, now everything costs more and the people who weren't minimum didn't get a raise.
      - meatysnapper 11y ago
        One argument that can be made is that everyday services are needed and won't be automated in the near future. Also, rich people like going to cafes and restaurants, and it's nice to live in a place where everybody goes out in the city. So, you end up with places like Australia and Switzerland where wages are high, but everyday costs are very high. I would be shocked if this didn't end up happening in the US. Ultimately, do we want a two-class society, or do we want something more egalitarian (Brazil vs Germany)? I know which one I prefer living in!
        drzaiusapelord 11y ago
        >Also, rich people like going to cafes and restaurants I wouldn't use restaurants as some example of progressive and egalitarian labor. They're the number one source of black market labor today, let alone what would happen if you double these wages. >I know which one I prefer living in! The countries with the terrible disparities in living are usually the ones that flirted with communism in the past and are largely socialist and anti-free market today. They put in these policies which caused depressed entrepreneurial activities, lack of free markets, heavy corruption, etc and have a legacy of poverty from these failed leftist policies. More leftist policies aren't the solution here (see: Greece). >(Brazil vs Germany) New data shows Germany is not egalitarian. In fact, its the worst in the EU. Earlier this year, the German Economic Institute (DIW) had released a study indicating that contrary to common conceptions, Germany had the most unequal distribution of wealth in the eurozone. http://www.theguardian.com/world/2014/oct/23/wealth-gap-inequality-germany-higher-study http://www.theguardian.com/world/2014/oct/23/wealth-gap-ineq...
      - 21echoes 11y ago
        this is a ridiculously warped view on minimum wage 1) The average age of a minimum age worker is 35, and 88% are not teenagers. So no, the example in your first line should not be "you're some teenager", it's "you're a parent working two jobs and still on food stamps". http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html 2) Talking about the cost of goods doubling is straight-up fear-mongering. Walmart set their minimum wage to $9, so raising it to $15 wouldn't even be doubling if minimum wage labor was literally their only cost of business. That's not even close to true, of course, but let's be generous and assume it's 1/3 of their sales minus CGS (~120B, so 40B). Their sales were ~500B last year, so with literally no other changes, they would only have to raise prices by 5% to go to $15 minimum wage.
    - megaman22 11y ago
      If you're working full-time doing work that has very little market value, then yeah, you're going to be poor.
  - adventured 11y ago
    The answer to that on the part of governments, will be to tax and regulate robot labor. They will attempt to force a gradient simulation of human costs onto robotics. We'll see serious efforts made toward those types of laws within a decade. Countries, to the extent they resist such taxes and regulation, will become new hot zones for robotic manufacturing etc.
  - ForHackernews 11y ago
    Automation (or AI) is coming for all of our jobs sooner or later. We need to start talking about how our society can pay for Basic Income for all the unemployable former fry cooks, truck drivers, lawyers, anesthesiologists and software developers.
    - joshuapants 11y ago
      Personally, I'm in favor of a land value tax[1]. [1] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
      - ForHackernews 11y ago
        Interesting case study: http://www.slate.com/articles/news_and_politics/metropolis/2015/05/the_land_tax_what_happened_to_towns_like_fairhope_alabama_that_tried_georgism.single.html http://www.slate.com/articles/news_and_politics/metropolis/2...
      - drzaiusapelord 11y ago
        Wikipedia: >A land value tax is said to be a progressive tax, in that the tax burden would fall on landlords and cannot be passed on as higher costs or lower wages to tenants, consumers, or laborers. The stereotype of rich landlords hoarding money is a falsehood. Every landlord I know here either makes a very modest income or loses money because of shady tenants and the incredible amount of pro-tenant legislature they take advantage of. In Chicago, an eviction takes 6-12 months. Are you guys going to take these laws off the books then? You can't have it both ways, really. Poor urban areas have enough abandoned buildings as-is without punishing landlords further. If you make rental properties a poor value proposition then squatting takes over. We've seen this a million times. Landlords, are unfortuantely, an easy target for politicians looking to score voting points from the non-land owning rabble.
        ForHackernews 11y ago
        All the landlords I know are really whiny that they have to actually maintain their properties and provide services to their customers. They seemed to assume they could just get free money for owning a building. I've suggested they sell their multimillion dollar asset and retire or go get a job, but they don't seem to want to do that. At any rate, the point of the land-value tax is that it would encourage land owners to build larger and better improvements on their property, instead of just holding the land and waiting for its price to increase. Think building a high-rise apartment building instead of leaving it as a parking lot.
  - rhino369 11y ago
    You will probably just see labor intensive operations leave LA or shut down. LA proper is too small of a market to debut robotic replacements for workers. I'm guessing this will just lead to higher food service costs and the disappearance of lower margin fast food.
    - drzaiusapelord 11y ago
      What about groceries? Farm worker salaries? Now you have to absorb those new costs. Food, in general, will skyrocket. There's this narrative that the left is playing up of "It'll be great, we'll kick out McDonalds!" Any industry that has low wage workers will suffer. Think the lines to return something in a retail store are long now? Wait until they have half the staff. More than likely privatization services will move in the same way MSP's have taken over the role of well paid IT people in smaller organizations today. Mega-grocery co will eliminate ma and pa groceries because they will only be the ones with the scale of industry to have competitive prices. Boutiqe restaurants will be replaced with franchises for the same reasons. Mail/internet ordering from other jurisdictions with lower wage prices will hurt local retail. This is neither good or bad, imo, but I don't think the people on the left are really considering what happens when you radically change wages by fiat. You get the Walmart-ization of all things because only organizations like Walmart can compete on price.
  - crdoconnor 11y ago
    >These low level fungible workers have been mislead by the far left into thinking this is all "free money" Economically it's pretty much a direct transfer from profits to workers. Given that corporate profits are at an all time high and are largely being hoarded instead of being invested (and thus not generating new jobs), it pretty much is free money. It's money that's only going to be spent and drive economic growth if given to a worker on minimum wage. If it gets creamed off as corporate profits it will just end up in one of the many ultra-high-net-worth sinkholes, like Manhattan real estate. As if that hasn't been bidded up enough.
- masterleep 11y ago
  It's a good thing that Los Angeles doesn't have a readily available source of black market labor.
- crdb 11y ago
  And it's already pretty large: 3.3 million legal workers at or below minimum wage [1] vs 12 million illegals in the United States. That's almost 80% of low wage workers. [1] http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Stat... [2] http://en.wikipedia.org/wiki/Illegal_immigration_to_the_United_States http://en.wikipedia.org/wiki/Illegal_immigration_to_the_Unit... - assuming most of them don't work as investment bankers.
- deleted 11y ago
  [deleted]
jgmmo 11y ago
"Support a $15 minimum wage, support the future!" https://www.facebook.com/Robots4MinimumWage https://www.facebook.com/Robots4MinimumWage
- toomuchtodo 11y ago
  * Increase minimum wage * Support the continuing automation of jobs away * Tax the income stream from automation and use it to provide strong social safety nets
  - jgmmo 11y ago
    "Tax the income stream from automation" This should be covered by corporate income tax, no?
    - savanaly 11y ago
      Better yet a healthy consumption tax.
      - toomuchtodo 11y ago
        Consumption taxes are typically regressive, and overly impact low-income consumers.
        crdoconnor 11y ago
        They're always regressive. That's why the rich love them.
        savanaly 11y ago
        Forgive my ignorance but how are they regressive? If you tax the money people spend and the rich spend more, that's neither regressive or progressive right? And to get the right amount of progressiveness we could just adjust the percentage tax on luxury items.
    - toomuchtodo 11y ago
gscott 11y ago
Due to the excessive amounts of labor in the market especially at the low end there was never a reason employers would need to pay more other then retention for business stability reasons. The minimum wage is just a needed correction for this oversupply of labor otherwise the market would have corrected itself already. Republicans argue for no minimum wage so more low end positions can be created but it is unlikely we have the infrastructure to compete with China or to turn ourselves back into a 3rd world nation.
- pdonis 11y ago
  > Due to the excessive amounts of labor in the market especially at the low end Why is this true? It's not a natural condition. The natural condition of a free market is an equilibrium between supply and demand. If you have excess supply, it means the market is not at equilibrium, which means either (a) it's in transition because of some recent change (not likely since the oversupply of low-end labor has been around for quite a while), or (b) the market is not free--something is skewing the supply-demand balance. The obvious candidate for that is...existing minimum wage laws. > The minimum wage is just a needed correction for this oversupply of labor Raising the minimum wage will not "correct" the oversupply of labor; it will make it worse. There will be more people wanting jobs, and businesses will be able to afford fewer of them.
  - hoopd 11y ago
    > It's not a natural condition. The natural condition of a free market is an equilibrium between supply and demand. That's the natural condition of a theoretical free market, real markets are not theoretical. As Keynes said, the market can stay irrational longer than you can stay solvent. Also, poor people have more children than rich people.
    - pdonis 11y ago
      > real markets are not theoretical They very often aren't, that's true. And in many cases, that's because real markets are not free markets; they are skewed by government intervention. The market for labor in the US, and indeed in most countries, certainly fits that description. > As Keynes said, the market can stay irrational longer than you can stay solvent. Yes, and he did his level best to make that prophecy come true by getting governments to intervene to keep markets irrational. > poor people have more children than rich people How is this relevant?
xacaxulu 11y ago
How should the market reward minimum skills or minimum investment into marketable skills, or minimum effort in the work place?
mattsfrey 11y ago
Anybody consider the plight of the skilled laborer who invested time and potentially money into being more marketable and is making $15, who is now brought down to the level of people working menial unskilled jobs? Is this fair? You can almost certainly be sure nobody will be given raises to maintain wage parity.
- ForHackernews 11y ago
  That's a classic example of crab mentality: https://en.wikipedia.org/wiki/Crab_mentality https://en.wikipedia.org/wiki/Crab_mentality Additionally, there is some evidence that minimum wage increases also have a "ripple effect" that increases wages for workers earning more than the minimum: http://www.brookings.edu/blogs/up-front/posts/2014/01/10-ripple-effect-of-increasing-the-minimum-wage-kearney-harris http://www.brookings.edu/blogs/up-front/posts/2014/01/10-rip...
- Eric_WVGG 11y ago
  - How do you call a skilled laborer being fairly compensated for his work having a "plight"? - Also that laborer isn't being "brought down"; others are being "lifted up." Others don't have to lose for you to win. And anyway, if the proponents of a higher minimum wage are correct, then this will result in a boom in the gross domestic product of LA as people who previously couldn't afford homes, appliances, or better food will be spending money on those things, increasing the income of LA businesses, which in fact would lead to rising wages for those skilled laborers you're so worried about… this is textbook Keynesian economics.
  - pdonis 11y ago
    > this will result in a boom in the gross domestic product of LA At the expense of what? If you raise wages but don't increase productivity, you're just robbing one sector of society to pay another. And nobody has mentioned any change accompanying this that would increase productivity.
    - Eric_WVGG 11y ago
      What makes you think productivity necessarily needs to be increased? The United States has the most productive workers in the world. There's plenty of wealth here to go around, and this "experiment" is happening because a lot of us believe that it isn't going around fairly. And stop acting like wealth redistribution is "robbing", unless you're willing to admit that when the rules changed from Keynesian guidelines in the 1950s to supply-side guidelines in the 1980s as "robbing" from the middle class and the poor.
MrZongle2 11y ago
I look forward to spending $14 on a Big Mac in Los Angeles in 2020.
- crdoconnor 11y ago
  Didn't happen in Australia.
- OrwellianChild 11y ago
  Look, here's the basic calculation... Fast food wages are about 26.5% of cost, including 3.3% profit. [1] I inflated wages to $15 from L.A.'s current $9. I maintained 3.3% profit. Old Wage New Wage Wage Rate $9.00 $15.00 Wage 26.5% 37.3% Other Expense 70.2% 59.4% Profit 3.3% 3.3% 100.0% 100.0% Cost Increase 18.3% Old Big Mac Meal [2] $7.00 New Big Mac Meal $8.28 We'll live. [1] http://www.heritage.org/research/reports/2014/09/higher-fast-food-wages-higher-fast-food-prices http://www.heritage.org/research/reports/2014/09/higher-fast... [2] http://www.expatistan.com/price/big-mac/los-angeles http://www.expatistan.com/price/big-mac/los-angeles
  - MrZongle2 11y ago
    +1 for sources and data, but keep in mind that the minimum rate hike doesn't fully rise to $15 until 2020. If this were happen immediately, then I'd probably concede your point. But we've got a while between now and then, and I think both inflation and the rising cost of beef will play a role. And who knows if automation will play a part? I bet that $8.28 for a Big Mac meal in 2020 will seem like a good deal.
dismal2 11y ago
This debate would be a lot simpler if we just agreed to eat the poor.
- angersock 11y ago
  Efficiency and progress is ours once more!
Mister_Snuggles 11y ago
For another minimum wage experiment, the newly elected NDP government in Alberta has also promised a $15/hr minimum wage. http://globalnews.ca/news/2008258/ndp-will-move-forward-on-15-minimum-wage-plans/ http://globalnews.ca/news/2008258/ndp-will-move-forward-on-1... It sounds like we will have a number of similar experiments to compare with each other.
outside1234 11y ago
I'm surprised that two other outcomes are not posited by this article: 1) Rise in inflation (this is ultimately going to hit the price of goods and services) 2) Rise in cash under the table employment. People already can't afford union work - this seems to push even more people to "hire the guy standing at the corner outside Home Depot".
- nasmorn 11y ago
  Both of these might happen but are somewhat independent of the question how many jobs will be lost. If jobs are not lost but under the table employment increases that would realistically be an even bigger win. If lots of jobs are lost the reason might be one of the things mentioned by you but I cannot see local wage increases drive inflation on its own, with a federal increase it seems more realistic
- crdoconnor 11y ago
  Profits tend to get hit first and hit hardest. Inflation follows for businesses with particularly thin profit margins, but the effect is usually muted.
vfrogger 11y ago
A few years ago I actually read the experiment regarding the NJ fast food workers and the PA fast food workers shortly after NJ passed a minimum wage. I saw it consistently being brought up in conversations regarding minimum wage, which is very interesting to me for some reason. So this is the report that was supposed to show that minimum wage increases don't affect employment rate (infact, they actually might improve it), however, when you look at the data presented within the study itself, you find that indeed, the NJ employment rate seemed to increase, and the PA employment rate seemed to decrease slightly. However, when you look at the number of employees per fast food restaurant, you'll see that the NJ restaurants started at a much lower number per restaurant than the PA restaurants, and then that employees per restaurant metric raises up by the end of the study but it never reaches the same number as the PA restaurants. What that study actually seemed to show to me, is given the ample notice that business owners had about the minimum wage increase, they thinned out their workforce. Then the minimum wage increase came (the study actually started shortly after the increase had already been put in place, I believe), and the business owners realized they over thinned out the workforce, hired a few more people to get to the right number which was still less than the PA number with lower labor costs. And since we don't exist in a vacuum, once a business owner realizes their store in NJ can run on 18 people, why should they run their store in PA with 20? It could probably make due with 19. However, no one ever brings up the point that per restaurant, NJ never had as many employees as PA, essentially stating that PA was using more employees to accomplish the same job as NJ, which is exactly what you would expect to happen from an increase in labor cost. Instead, everyone only focuses on the jobs added/lost during the short time of the study. It's like I'm the only person in the world who actually looked at the data in the report, instead of just reading the author's findings. Very Frustrating to consistently seeing this study shown as proof that minimum wage doesn't affect employment numbers.
- crdoconnor 11y ago
  That study was replicated across other state borders. Same outcome. No statistically significant change in employment detected. The amount of vitriol thrown at that particular study is pretty shocking. You can tell it's a threat. One "researcher" (Neumark) even went as far as to redo the study with a restricted, smaller data set in order to yield the preferred outcome - a decrease in employment.

36 points by stillsut 11y ago

naturalethic 11y ago

The fascinating part will be the emergence of a larger black market for labor.

drzaiusapelord 11y ago
The real fascinating part is how quickly we'll have robotics doing a lot of those job when municipalities push out mandatory $15 to $20 an hour laws. These low level fungible workers have been mislead by the far left into thinking this is all "free money" and things like unemployment, lay offs, automation, etc can't happen. A lot of companies have tested automation solutions and have been shy to launch them for a variety of reasons, mostly political. $15 an hour full time is a $31,000 a year job. In most markets that's entry level white collar college educated material that will work exempt for you. Fry cooks and dishwashers who think they can get that via legislation are going to be surprised at how quick they can be replaced with machines or in other ways be made redundant. Personally, I think we should just move to as much robotics as possible and setup some kind of minimum welfare income and call it a day. All this pussy-footing around with unions, minimum wages, etc just delays the inevitable.
- jonnycowboy 11y ago
  Do you think a person working full time should be classified as poor?
  - drzaiusapelord 11y ago
    Yes. If you're some teenager selling ice cream for the summer and being taken care of by your parents, you shouldn't be making $35,000 a year. The larger question, of course, should be answered by the customers of McDonalds or Target. Are they willing to pay twice the cost of goods so everyone who works there can make more money? Probably not, and those businesses will probably fold. Now you have everyone complaining about unemployment and the lack of affordable goods. Do you pass yet another law to make those cheap? Who pays for this stuff in the end? You can't economically dictate everything unless you want to migrate into command-economy communism, and the world tried that fairly recently with disastrous results. Not to mention price inflation for common goods once the local econony has everyone getting $15 an hour. Great, now everything costs more and the people who weren't minimum didn't get a raise.
    - meatysnapper 11y ago
      One argument that can be made is that everyday services are needed and won't be automated in the near future. Also, rich people like going to cafes and restaurants, and it's nice to live in a place where everybody goes out in the city. So, you end up with places like Australia and Switzerland where wages are high, but everyday costs are very high. I would be shocked if this didn't end up happening in the US. Ultimately, do we want a two-class society, or do we want something more egalitarian (Brazil vs Germany)? I know which one I prefer living in!
      - drzaiusapelord 11y ago
        >Also, rich people like going to cafes and restaurants I wouldn't use restaurants as some example of progressive and egalitarian labor. They're the number one source of black market labor today, let alone what would happen if you double these wages. >I know which one I prefer living in! The countries with the terrible disparities in living are usually the ones that flirted with communism in the past and are largely socialist and anti-free market today. They put in these policies which caused depressed entrepreneurial activities, lack of free markets, heavy corruption, etc and have a legacy of poverty from these failed leftist policies. More leftist policies aren't the solution here (see: Greece). >(Brazil vs Germany) New data shows Germany is not egalitarian. In fact, its the worst in the EU. Earlier this year, the German Economic Institute (DIW) had released a study indicating that contrary to common conceptions, Germany had the most unequal distribution of wealth in the eurozone. http://www.theguardian.com/world/2014/oct/23/wealth-gap-inequality-germany-higher-study http://www.theguardian.com/world/2014/oct/23/wealth-gap-ineq...
    - 21echoes 11y ago
      this is a ridiculously warped view on minimum wage 1) The average age of a minimum age worker is 35, and 88% are not teenagers. So no, the example in your first line should not be "you're some teenager", it's "you're a parent working two jobs and still on food stamps". http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html 2) Talking about the cost of goods doubling is straight-up fear-mongering. Walmart set their minimum wage to $9, so raising it to $15 wouldn't even be doubling if minimum wage labor was literally their only cost of business. That's not even close to true, of course, but let's be generous and assume it's 1/3 of their sales minus CGS (~120B, so 40B). Their sales were ~500B last year, so with literally no other changes, they would only have to raise prices by 5% to go to $15 minimum wage.
  - megaman22 11y ago
    If you're working full-time doing work that has very little market value, then yeah, you're going to be poor.
- adventured 11y ago
  The answer to that on the part of governments, will be to tax and regulate robot labor. They will attempt to force a gradient simulation of human costs onto robotics. We'll see serious efforts made toward those types of laws within a decade. Countries, to the extent they resist such taxes and regulation, will become new hot zones for robotic manufacturing etc.
- ForHackernews 11y ago
  Automation (or AI) is coming for all of our jobs sooner or later. We need to start talking about how our society can pay for Basic Income for all the unemployable former fry cooks, truck drivers, lawyers, anesthesiologists and software developers.
  - joshuapants 11y ago
    Personally, I'm in favor of a land value tax[1]. [1] https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
    - ForHackernews 11y ago
      Interesting case study: http://www.slate.com/articles/news_and_politics/metropolis/2015/05/the_land_tax_what_happened_to_towns_like_fairhope_alabama_that_tried_georgism.single.html http://www.slate.com/articles/news_and_politics/metropolis/2...
    - drzaiusapelord 11y ago
      Wikipedia: >A land value tax is said to be a progressive tax, in that the tax burden would fall on landlords and cannot be passed on as higher costs or lower wages to tenants, consumers, or laborers. The stereotype of rich landlords hoarding money is a falsehood. Every landlord I know here either makes a very modest income or loses money because of shady tenants and the incredible amount of pro-tenant legislature they take advantage of. In Chicago, an eviction takes 6-12 months. Are you guys going to take these laws off the books then? You can't have it both ways, really. Poor urban areas have enough abandoned buildings as-is without punishing landlords further. If you make rental properties a poor value proposition then squatting takes over. We've seen this a million times. Landlords, are unfortuantely, an easy target for politicians looking to score voting points from the non-land owning rabble.
      - ForHackernews 11y ago
        All the landlords I know are really whiny that they have to actually maintain their properties and provide services to their customers. They seemed to assume they could just get free money for owning a building. I've suggested they sell their multimillion dollar asset and retire or go get a job, but they don't seem to want to do that. At any rate, the point of the land-value tax is that it would encourage land owners to build larger and better improvements on their property, instead of just holding the land and waiting for its price to increase. Think building a high-rise apartment building instead of leaving it as a parking lot.
- rhino369 11y ago
  You will probably just see labor intensive operations leave LA or shut down. LA proper is too small of a market to debut robotic replacements for workers. I'm guessing this will just lead to higher food service costs and the disappearance of lower margin fast food.
  - drzaiusapelord 11y ago
    What about groceries? Farm worker salaries? Now you have to absorb those new costs. Food, in general, will skyrocket. There's this narrative that the left is playing up of "It'll be great, we'll kick out McDonalds!" Any industry that has low wage workers will suffer. Think the lines to return something in a retail store are long now? Wait until they have half the staff. More than likely privatization services will move in the same way MSP's have taken over the role of well paid IT people in smaller organizations today. Mega-grocery co will eliminate ma and pa groceries because they will only be the ones with the scale of industry to have competitive prices. Boutiqe restaurants will be replaced with franchises for the same reasons. Mail/internet ordering from other jurisdictions with lower wage prices will hurt local retail. This is neither good or bad, imo, but I don't think the people on the left are really considering what happens when you radically change wages by fiat. You get the Walmart-ization of all things because only organizations like Walmart can compete on price.
- crdoconnor 11y ago
  >These low level fungible workers have been mislead by the far left into thinking this is all "free money" Economically it's pretty much a direct transfer from profits to workers. Given that corporate profits are at an all time high and are largely being hoarded instead of being invested (and thus not generating new jobs), it pretty much is free money. It's money that's only going to be spent and drive economic growth if given to a worker on minimum wage. If it gets creamed off as corporate profits it will just end up in one of the many ultra-high-net-worth sinkholes, like Manhattan real estate. As if that hasn't been bidded up enough.
masterleep 11y ago
It's a good thing that Los Angeles doesn't have a readily available source of black market labor.
crdb 11y ago
And it's already pretty large: 3.3 million legal workers at or below minimum wage [1] vs 12 million illegals in the United States. That's almost 80% of low wage workers. [1] http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_States http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Stat... [2] http://en.wikipedia.org/wiki/Illegal_immigration_to_the_United_States http://en.wikipedia.org/wiki/Illegal_immigration_to_the_Unit... - assuming most of them don't work as investment bankers.
deleted 11y ago
[deleted]

jgmmo 11y ago

"Support a $15 minimum wage, support the future!" https://www.facebook.com/Robots4MinimumWage https://www.facebook.com/Robots4MinimumWage

toomuchtodo 11y ago
* Increase minimum wage * Support the continuing automation of jobs away * Tax the income stream from automation and use it to provide strong social safety nets
- jgmmo 11y ago
  "Tax the income stream from automation" This should be covered by corporate income tax, no?
  - savanaly 11y ago
    Better yet a healthy consumption tax.
    - toomuchtodo 11y ago
      Consumption taxes are typically regressive, and overly impact low-income consumers.
      - crdoconnor 11y ago
        They're always regressive. That's why the rich love them.
      - savanaly 11y ago
        Forgive my ignorance but how are they regressive? If you tax the money people spend and the rich spend more, that's neither regressive or progressive right? And to get the right amount of progressiveness we could just adjust the percentage tax on luxury items.
  - toomuchtodo 11y ago

gscott 11y ago

Due to the excessive amounts of labor in the market especially at the low end there was never a reason employers would need to pay more other then retention for business stability reasons. The minimum wage is just a needed correction for this oversupply of labor otherwise the market would have corrected itself already. Republicans argue for no minimum wage so more low end positions can be created but it is unlikely we have the infrastructure to compete with China or to turn ourselves back into a 3rd world nation.

pdonis 11y ago
> Due to the excessive amounts of labor in the market especially at the low end Why is this true? It's not a natural condition. The natural condition of a free market is an equilibrium between supply and demand. If you have excess supply, it means the market is not at equilibrium, which means either (a) it's in transition because of some recent change (not likely since the oversupply of low-end labor has been around for quite a while), or (b) the market is not free--something is skewing the supply-demand balance. The obvious candidate for that is...existing minimum wage laws. > The minimum wage is just a needed correction for this oversupply of labor Raising the minimum wage will not "correct" the oversupply of labor; it will make it worse. There will be more people wanting jobs, and businesses will be able to afford fewer of them.
- hoopd 11y ago
  > It's not a natural condition. The natural condition of a free market is an equilibrium between supply and demand. That's the natural condition of a theoretical free market, real markets are not theoretical. As Keynes said, the market can stay irrational longer than you can stay solvent. Also, poor people have more children than rich people.
  - pdonis 11y ago
    > real markets are not theoretical They very often aren't, that's true. And in many cases, that's because real markets are not free markets; they are skewed by government intervention. The market for labor in the US, and indeed in most countries, certainly fits that description. > As Keynes said, the market can stay irrational longer than you can stay solvent. Yes, and he did his level best to make that prophecy come true by getting governments to intervene to keep markets irrational. > poor people have more children than rich people How is this relevant?

xacaxulu 11y ago

How should the market reward minimum skills or minimum investment into marketable skills, or minimum effort in the work place?

mattsfrey 11y ago

Anybody consider the plight of the skilled laborer who invested time and potentially money into being more marketable and is making $15, who is now brought down to the level of people working menial unskilled jobs? Is this fair? You can almost certainly be sure nobody will be given raises to maintain wage parity.

ForHackernews 11y ago
That's a classic example of crab mentality: https://en.wikipedia.org/wiki/Crab_mentality https://en.wikipedia.org/wiki/Crab_mentality Additionally, there is some evidence that minimum wage increases also have a "ripple effect" that increases wages for workers earning more than the minimum: http://www.brookings.edu/blogs/up-front/posts/2014/01/10-ripple-effect-of-increasing-the-minimum-wage-kearney-harris http://www.brookings.edu/blogs/up-front/posts/2014/01/10-rip...
Eric_WVGG 11y ago
- How do you call a skilled laborer being fairly compensated for his work having a "plight"? - Also that laborer isn't being "brought down"; others are being "lifted up." Others don't have to lose for you to win. And anyway, if the proponents of a higher minimum wage are correct, then this will result in a boom in the gross domestic product of LA as people who previously couldn't afford homes, appliances, or better food will be spending money on those things, increasing the income of LA businesses, which in fact would lead to rising wages for those skilled laborers you're so worried about… this is textbook Keynesian economics.
- pdonis 11y ago
  > this will result in a boom in the gross domestic product of LA At the expense of what? If you raise wages but don't increase productivity, you're just robbing one sector of society to pay another. And nobody has mentioned any change accompanying this that would increase productivity.
  - Eric_WVGG 11y ago
    What makes you think productivity necessarily needs to be increased? The United States has the most productive workers in the world. There's plenty of wealth here to go around, and this "experiment" is happening because a lot of us believe that it isn't going around fairly. And stop acting like wealth redistribution is "robbing", unless you're willing to admit that when the rules changed from Keynesian guidelines in the 1950s to supply-side guidelines in the 1980s as "robbing" from the middle class and the poor.

MrZongle2 11y ago

I look forward to spending $14 on a Big Mac in Los Angeles in 2020.

crdoconnor 11y ago
Didn't happen in Australia.
OrwellianChild 11y ago
Look, here's the basic calculation... Fast food wages are about 26.5% of cost, including 3.3% profit. [1] I inflated wages to $15 from L.A.'s current $9. I maintained 3.3% profit. Old Wage New Wage Wage Rate $9.00 $15.00 Wage 26.5% 37.3% Other Expense 70.2% 59.4% Profit 3.3% 3.3% 100.0% 100.0% Cost Increase 18.3% Old Big Mac Meal [2] $7.00 New Big Mac Meal $8.28 We'll live. [1] http://www.heritage.org/research/reports/2014/09/higher-fast-food-wages-higher-fast-food-prices http://www.heritage.org/research/reports/2014/09/higher-fast... [2] http://www.expatistan.com/price/big-mac/los-angeles http://www.expatistan.com/price/big-mac/los-angeles
- MrZongle2 11y ago
  +1 for sources and data, but keep in mind that the minimum rate hike doesn't fully rise to $15 until 2020. If this were happen immediately, then I'd probably concede your point. But we've got a while between now and then, and I think both inflation and the rising cost of beef will play a role. And who knows if automation will play a part? I bet that $8.28 for a Big Mac meal in 2020 will seem like a good deal.

dismal2 11y ago

This debate would be a lot simpler if we just agreed to eat the poor.

angersock 11y ago
Efficiency and progress is ours once more!

Mister_Snuggles 11y ago

For another minimum wage experiment, the newly elected NDP government in Alberta has also promised a $15/hr minimum wage. http://globalnews.ca/news/2008258/ndp-will-move-forward-on-15-minimum-wage-plans/ http://globalnews.ca/news/2008258/ndp-will-move-forward-on-1... It sounds like we will have a number of similar experiments to compare with each other.

outside1234 11y ago

I'm surprised that two other outcomes are not posited by this article: 1) Rise in inflation (this is ultimately going to hit the price of goods and services) 2) Rise in cash under the table employment. People already can't afford union work - this seems to push even more people to "hire the guy standing at the corner outside Home Depot".

nasmorn 11y ago
Both of these might happen but are somewhat independent of the question how many jobs will be lost. If jobs are not lost but under the table employment increases that would realistically be an even bigger win. If lots of jobs are lost the reason might be one of the things mentioned by you but I cannot see local wage increases drive inflation on its own, with a federal increase it seems more realistic
crdoconnor 11y ago
Profits tend to get hit first and hit hardest. Inflation follows for businesses with particularly thin profit margins, but the effect is usually muted.

vfrogger 11y ago

A few years ago I actually read the experiment regarding the NJ fast food workers and the PA fast food workers shortly after NJ passed a minimum wage. I saw it consistently being brought up in conversations regarding minimum wage, which is very interesting to me for some reason. So this is the report that was supposed to show that minimum wage increases don't affect employment rate (infact, they actually might improve it), however, when you look at the data presented within the study itself, you find that indeed, the NJ employment rate seemed to increase, and the PA employment rate seemed to decrease slightly. However, when you look at the number of employees per fast food restaurant, you'll see that the NJ restaurants started at a much lower number per restaurant than the PA restaurants, and then that employees per restaurant metric raises up by the end of the study but it never reaches the same number as the PA restaurants. What that study actually seemed to show to me, is given the ample notice that business owners had about the minimum wage increase, they thinned out their workforce. Then the minimum wage increase came (the study actually started shortly after the increase had already been put in place, I believe), and the business owners realized they over thinned out the workforce, hired a few more people to get to the right number which was still less than the PA number with lower labor costs. And since we don't exist in a vacuum, once a business owner realizes their store in NJ can run on 18 people, why should they run their store in PA with 20? It could probably make due with 19. However, no one ever brings up the point that per restaurant, NJ never had as many employees as PA, essentially stating that PA was using more employees to accomplish the same job as NJ, which is exactly what you would expect to happen from an increase in labor cost. Instead, everyone only focuses on the jobs added/lost during the short time of the study. It's like I'm the only person in the world who actually looked at the data in the report, instead of just reading the author's findings. Very Frustrating to consistently seeing this study shown as proof that minimum wage doesn't affect employment numbers.

crdoconnor 11y ago
That study was replicated across other state borders. Same outcome. No statistically significant change in employment detected. The amount of vitriol thrown at that particular study is pretty shocking. You can tell it's a threat. One "researcher" (Neumark) even went as far as to redo the study with a restricted, smaller data set in order to yield the preferred outcome - a decrease in employment.